As investors become inundated with financial advice in the news and on social media, misguided advice from unqualified sources – such as relatives, generative artificial intelligence (AI) or online influencers – has become more prevalent and actionable. However, willingness to implement and trust financial advice from online sources varies by generation, according to Nationwide's ninth annual Advisor Authority survey, powered by the Nationwide Retirement Institute.

The survey found more than a third (34%) of non-retired investors aged 18-54 have encountered, then acted upon financial information seen online or on social media that turned out to be misleading or factually incorrect, including more than two in five (41%) Gen Z and 34% of Millennial investors.

"Social media is a powerful tool and a great resource for learning about different financial topics, but it comes with plenty of misinformation as well," said Rona Guymon, Senior Vice President of Nationwide Annuity Distribution. "Online information can be inaccurate, or not applicable to your situation. That's why it's important to scrutinize the financial information you find online – or better yet, turn to an advisor for help."

The impact of online (mis)information on younger investors

Younger investors, whose upbringing has coincided with the rise in online information (and misinformation), are navigating the financial advice they find on the internet differently than older investors. More than two-fifths (42%) of Gen Z investors and 38% of Millennial investors are accessing financial information, guidance and advice through social media, by far the most of any generation (vs 16% of Gen X and 5% of Baby Boomers). Millennials (21%) and Gen Z (17%) are also the age groups most likely to turn to generative AI for financial information and guidance, compared to 7% of Gen X and 2% of Baby Boomer investors.

Consulting the internet for efficient and accessible information is second nature to younger investors, who are unfortunately experiencing the pitfalls of unverified financial advice in real time. More than four in ten (41%) Gen Z and 34% of Millennial investors have encountered, then acted on misleading or factually incorrect financial information seen online or on social media.

By contrast, older investors appear to be more cautious about online financial information, making them less likely to fall victim to misleading advice: just 6% of Baby Boomer investors have acted on misleading or factually incorrect financial information seen online or on social media — the least of any generational cohort.

Younger investors are more trusting of advisors using AI

While their elders take a more reserved approach to AI-generated advice, many younger investors say their trust in financial professionals would increase if their advisor incorporated AI into their counseling process: more than a third (34%) of Gen Z investors and 37% of Millennial investors say they would trust their financial professional more if they leveraged AI to inform the counsel they provided.

In turn, Gen Z and Millennial investors are generally more supportive of advisors using AI to streamline their work, which can free up precious time for advisors to pursue more meaningful client interactions, one-on-one counsel or other value-added activities. Four in ten (40%) Gen Z investors and 36% of Millennial investors say they would trust a financial professional more if they leveraged AI to streamline day-to-day administrative tasks.

"While generative AI will likely continue to be an effective means of research and efficiency, it's still important to have a qualified financial professional be part of the process," Guymon said. "Financial professionals are familiar with the specific needs of investors and can review any AI generated advice and action steps to be sure they are in the best interest of their clients."

Advisors are experimenting with AI and proactively addressing misinformation
While the emergence of AI may lead to further innovations in the financial sector, advisors today are playing it safe and using it as a supplement, rather than a replacement, for personalized advice. Nearly a third (31%) of advisors who are planning to implement AI into their practice in the next 12 months are planning to use the platform for data insights. More than a quarter (27%) plan to use it to onboard clients. Importantly, the same percentage (27%) plan to use it to educate clients. 

Regardless of the extent to which AI is implemented, most advisors see it becoming part of their work over the next year in some capacity. Just 19% of advisors say they are not planning to implement AI capabilities into their practice over the next 12 months.

To ensure their clients do not fall victim to financial misinformation found online, advisors are leaning into educational and preventative measures to emphasize the importance of verified, reputable financial advice. Six in ten (60%) advisors are providing guidance to their clients on a case-by-case basis when they're approached with questions about a specific situation, and nearly the same amount (58%) are educating their clients on the potential risks of misinformation found on social media and generated by AI. In addition, 47% are encouraging their clients to stick to their long-term financial plans to avoid hasty decisions.

For additional insights on this survey data, see our infographic.

Nationwide's ninth annual Advisor Authority study powered by the Nationwide Retirement Institute® explores critical issues confronting advisors, financial professionals and individual investors—and the innovative techniques that they need to succeed in today's complex market.